New Jersey Supreme Court Expands Reach of the Consumer Fraud Act to Include Customized Merchandise

Relying on the remedial purpose of the Consumer Fraud Act (CFA), the New Jersey Supreme Court recently held that customized merchandise falls within the reach of the CFA.

In All the Way Towing, LLC v. Bucks County International, Inc., plaintiffs, an individual and his limited liability towing company, entered into a contract with defendants for the purchase of a medium-duty 4×4 truck to be customized with an autoloader tow unit to meet plaintiffs’ particular needs. After the manufacturer attempted delivery on four occasions of a tow truck with significant problems, plaintiffs believed the situation to be “hopeless,” rejected delivery and demanded return of a $10,000.00 deposit. The manufacturer refused return of the deposit. Plaintiffs then brought suit for, among other things, violation of the CFA.

The trial court granted summary judgment to the manufacturer on all claims, holding in pertinent part that a customized “tow truck was not something available ‘to the public for sale’” under the CFA. The Appellate Division reversed, holding that the line of cases that excluded “complex” goods or services from CFA claims was not applicable here because there was no showing that the tow truck at issue was any more “complex” than any other tow truck. Defendants then appealed, arguing that the CFA does not apply to transactions concerning custom-made goods designed specifically to meet the purchaser’s particular needs.

The Supreme Court agreed with the Appellate Division that the trial court took too narrow an approach in assessing what constitutes “merchandise” under the remedial CFA. The Court held that the customized tow truck and rig fit within the CFA’s expansive definition of “merchandise” and, therefore, plaintiffs’ CFA claim should not have foundered based on an application of that term. In so holding, the Court examined the nature of the transaction when customized products and commercial entities are involved in a private individual CFA claim, and reasoned that the applicability of the CFA does not turn on whether the public at large purchases the customized merchandise, but rather whether a member of the public could, if inclined, purchase a similar item. The court explained that it was consistent with the intent of the CFA to protect consumers regardless of the popularity of the product or service sold or advertised and thus held that the availability requirement can be met by showing that any member of the public could purchase the product or service, if willing and able, regardless of whether such a purchase is popular. In other words, “[s]imply because identically customized tow trucks are not typically sold to the ‘public at large’ does not mean the trucks are not offered ‘to the public for sale.’” The Court also rejected any arguments that the commercial setting of a transaction removed the transaction from the CFA’s reach because plaintiffs purchased the truck for their own use.

Going forward, courts will continue to focus on the nature of transactions in determining whether they fall under the reach of the CFA. Under the New Jersey Supreme Court’s expansive interpretation, for customized merchandise, the question is whether a member of the public at large could purchase a similar product. In business-to-business transactions, the answer to that question will determine whether the product can fit within the CFA’s definition of “merchandise.”

Caroline E. Oks is an Associate in the Gibbons Commercial & Criminal Litigation Department.
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